Procter & Gamble, the world's largest consumer goods company, said yesterday it was facing "unprecedented" foreign exchange volatility in emerging markets and would have to respond with further price increases.
Clayt Daley, chief financial officer, said "the devaluation across the emerging markets we are witnessing is unprecedented in its depth, breadth and speed," citing recent steep falls in the value of currencies such as the Russian rouble and the Mexican peso.
He said that, while P&G would seek to offset increased dollar-based input costs in its global markets with local price increases, it would also have to absorb the translation impact on its overseas earnings in its top line.
P&G revised its outlook for full year earnings per share to a range of $4.15 to $4.25, versus an earlier forecast of $4.18 to $4.25.
International sales account for almost two thirds of P&G's revenue. Last week, its rival Kimberly-Clark also said the current environment was pushing it to take a more nimble and flexible approach to pricing in overseas markets, citing unprecedented volatility.
While oil prices have fallen, P&G said it was still facing high prices for commodities such as potash and sodium sulphate.
AG Lafley, chief executive, noted that while overall commodity costs for the year were expected to increase by $300m less than forecast "we're still looking at the toughest year in this company's history, with $2.7bn in commodity and energy costs that we have to eat".
"We still have a pretty tough commodity picture out there," he added.
During the first quarter, the company said organic sales - excluding acquisitions - rose 5 per cent, in the middle of its long-term target of 4 to 6 per cent growth. It said it was still expecting organic growth in the same range over the remainder of its year.
During the quarter, P&G said it had lost some market share in the US as a result of increasing prices on major brands. But Mr Daley said the company expected to pull back market share as competitors were obliged to follow the price increases.
P&G's lower-cost brands, such as Gain laundry detergent and Luvs nappies, grew more strongly during the quarter than premium brands. Luvs, for instance, saw sales volumes grow by 7 per cent and gained market share.
Mr Lafley said the company was responding to slowing consumer demand in the US with an increased marketing focus on the comparative performance value of its top products.
In the first quarter, net sales increased 9 per cent to $22bn. Earnings also rose 9 per cent to $3.3bn, while diluted earnings per share were up 12 per cent at $1.03.
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